Petroleum prices have hit a three year high in India in the past couple of days and are expected to remain in the vicinity of Rs 79-80/ per litre for petrol in the coming days.?
BCCL
The steep increase began a couple of months back after the government introduced a daily revision of petroleum prices beginning from June 16. Since?July, there has been an increase of Rs 7.3 per litre for petrol.
At the outset, it is a strange phenomenon considering the price of crude in the international market.?
BCCL
The prices were similar in 2014 when crude was $ 108.6 per barrel on the current price of $54.2 per barrel. So, by that logic, if international crude has come down to $50 per barrel, then petrol and diesel prices should have been between Rs 18 - Rs 20 per litre.
But it is not just the crude prices that determine the rate of petrol and diesel in India. A number of other factors play a key role when it comes to the retail pricing of petroleum in India.
According to data on Indian Oil’s website, petrol dealers buy petrol at the rate of Rs 30.41 in Delhi. After the addition of excise duty (Rs 21.48), dealer commission (Rs 3.47) and VAT (Rs 14.97 or 27 per cent), the total price stands at Rs 70.43, approximately. This break up differs slightly from state to state, depending upon the VAT applied.
The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting international oil prices. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre.
BCCL
The duty hike resulted in government's excise mop-up more than doubling to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15. The windfall from the excise duty hikes helped the government bridge its budgetary deficit.